Pick a cheap bankruptcy lawyer and it could really cost you.
We’re trained as consumers to find the lowest price for stuff we buy. But picking a lawyer is not the place for economy.
But how can you know what a bankruptcy should cost when you’ve never hired a lawyer before and you don’t want to ask around?
Lots of factors drive the price of bankruptcy: location, complexity, competition.
But one thing is universal.
The cheapest bankruptcy lawyer in town either doesn’t have experience or doesn’t plan to do the work himself, pawning your case off on unlicensed staff.
And the extra cost of getting another lawyer to repair a case gone bad is only half the problem. Not all the problems created by the bargain-basement lawyer can be fixed.
Even when the case can be saved, the clients will end up paying twice: one to the cheapo lawyer, and again to competent counsel to clean it up.
Undoubtedly, they’ll pay more than if they’d paid a good lawyer to do it right the first time.
Bankruptcy no place for mistakes
Right now, in my office we have three conversions from Chapter 11 to Chapter 7 involving significant real estate assets. These are cases where the first lawyer couldn’t see the obvious: the Chapter 11 case was doomed from the start.
We have cases where big ticket assets were omitted. We have cases where the initial attorney just didn’t persist with the debtor to get the schedules right, and ones where counsel didn’t really analyze the choice of chapter.
Almost without exception, the debtors chose counsel based on price. They went with the lower price for their bankruptcy case, and they bought a rat’s nest.
Cost conscious only at the end
Why is it that notions of economy only surface after a person has wracked up tens of thousands of dollars in debt?
Many of the debtors gave more thought to credit card expenditures or their credit score than they gave to picking a bankruptcy lawyer.
The influx of lawyers to this field and the prevalence of lawyer advertising suggest bankruptcy law is a commodity. Not so.
Yet lawyers with no track record to tout or past clients to spread the word compete on price. If you can buy a $15 toaster, why pay $30? goes the thinking.
Bankruptcy forms are misleading
The existence of non lawyer petition preparers and do-it-yourself books reinforce the idea that bankruptcy is more like playing Go Fish than contract bridge.
Then, there are the official forms. The fact that there are forms to fill out suggests that filing bankruptcy is all about the paper. It’s really about the disclosure the paper requires. And what the system does with the information disclosed.
And disclosure is what the forms are all about, and the system wants disclosure because there may be consequences to the stuff disclosed.
Price isn’t everything
Quality of counsel is not reliably correlated with price: I’ve seen some utter newbie lawyers charging more than highly skilled veterans for an inferior product. But capable counsel is seldom the cheapest.
So, my charge to those needing bankruptcy relief is to consider that hiring the cheap bankruptcy lawyer is a poor bargain.
Another time, I’ll talk about how to assess a lawyer’s suitability for your case.
Image courtesy of purpleslog.